The green light given to Bitcoin exchange-traded funds (ETFs) in the United States has provided a much-needed avenue for capital flow from traditional finance (TradFi).
According to David Prinçay, the president of Binance France, the U.S. spot Bitcoin ETFs are the first vehicles that allow institutions to easily invest in Bitcoin (BTC). Prinçay stated in an exclusive interview with Cointelegraph that prior to the approval of ETFs, large financial institutions in Europe were unable to invest in Bitcoin. However, this has changed since then.
During the first quarter of 2024, BNP Paribas, the second-largest bank in Europe, invested in BlackRock’s spot Bitcoin ETF. The initial investment was only $41,684, which is less than the value of one Bitcoin, but Prinçay referred to it as primarily “symbolic”.
The introduction of spot Bitcoin ETFs has also transformed Bitcoin into a financial asset for retirement, even in the eyes of mainstream investors. Prinçay explained that some large financial institutions, like Fidelity, allow investors to directly expose themselves to Bitcoin ETFs through their 401(k) retirement plans. Fidelity happens to be the largest 401(k) plan provider in the U.S.
Furthermore, these types of investments bring in long-term capital that could potentially reduce volatility, Prinçay added.
Despite the goal of attracting more baby boomers to Bitcoin, retail investors still hold over 85% of the underlying BTC, with only 10% held by hedge funds. However, this is in line with the natural progression of newly-launched trading products, as retail investors hold the majority of the world’s cash.
Prinçay clarified that these retail investors not only include those who previously held BTC in a cold wallet but also traditional finance retail investors.
According to Dune Analytics, the U.S. spot Bitcoin ETFs have absorbed 4.29% of Bitcoin’s supply since their launch.